Solaris Oilfield Infrastructure Inc

Current report

The Company’s ability to complete the MER Acquisition is subject to various closing conditions, including obtaining the required shareholder approval and regulatory clearance, which may impose conditions that could adversely affect the Company or cause the MER Acquisition not to be completed.

Current report

The MER Acquisition is subject to a number of conditions to closing as specified in the definitive agreement. These closing conditions include, among others, including (i) approval of the stock issuance by Company shareholders, (ii) the Class A common stock issuable upon exchange of the Solaris LLC Units and shares of Class B common stock to be issued as consideration having been authorized for listing on the NYSE, (iii) the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (iv) the absence of any injunction, order, decree or law preventing, prohibiting or making illegal the consummation of the MER Acquisition, (v) with respect to each party, (A) the accuracy of the other party’s representations and warranties, subject to specified materiality qualifications, (B) compliance by the other party with its covenants in the definitive agreement in all material respects and (C) the absence of a “Material Adverse Effect” (as defined in the definitive agreement) with respect to the other party since the date of the definitive agreement that is continuing and (vi) in the case of the Company, the receipt of certain required financial statements and corresponding interim financial statements of MER as of and for any quarterly period(s) ended more than 45 days prior to the closing of the MER Acquisition.

Current report

No assurance can be given that the required shareholder approval and regulatory clearance will be obtained or that the other required conditions to the closing of the MER Acquisition will be satisfied. Even if regulatory clearance is obtained, no assurance can be given as to the terms, conditions and timing of such clearance, including whether any required conditions will materially adversely affect the combined company following the closing of the MER Acquisition. Any delay in completing the MER Acquisition could cause the combined company not to realize, or to be delayed in realizing, some or all of the benefits that Solaris Inc. and MER expect to achieve if the MER Acquisition is successfully completed within its expected time frame. Solaris Inc. can provide no assurance that these conditions will not result in the abandonment or delay of the MER Acquisition. The occurrence of any of these events individually or in combination could have a material adverse effect on the Company’s results of operations and the trading price of the Class A common stock.

Current report

Because the cash consideration is subject to certain adjustments, MER does not have full certainty as to the final cash consideration amount that will be paid, and such amount may be materially higher than was anticipated upon the Company’s entry into the definitive agreement.

Current report

Pursuant to the definitive agreement, the cash consideration to be paid in connection with the contribution is subject to certain adjustments.

Current report

Because certain of the individual items forming the adjustments to be made to the cash consideration are not knowable with full certainty by the Company prior to the contribution, the final cash consideration paid by Solaris LLC

Current report

may be materially higher than the base cash consideration of $60 million. If the cash consideration is materially higher than expected, the value of the contribution to the Company and its current stockholders may be materially less than was anticipated upon the Company’s entry into the definitive agreement.

Current report

Combining the Company’s business with MER’s may be more difficult, costly or time-consuming than expected and the combined company may fail to realize the anticipated benefits of the contribution, which may adversely affect the combined company’s business results and negatively affect the value of the Class A common stock.

Current report

The success of the contribution will depend on, among other things, the ability of the two companies to combine their businesses in a manner that facilitates growth opportunities and realizes expected cost savings. The combined company may encounter difficulties in integrating the Company’s and MER’s businesses and realizing the anticipated benefits of the contribution. The combined company must achieve the anticipated improvement in free cash flow generation and returns and achieve the planned cost savings without adversely affecting current revenues and operations. If the combined company is not able to successfully achieve these objectives, the anticipated benefits of the contribution may not be realized fully, or at all, or may take longer to realize than expected.

Current report

The contribution involves the combination of two companies which currently operate, and until the completion of the contribution will continue to operate, as independent companies. There can be no assurances that the businesses can be integrated successfully. It is possible that the integration process could result in the loss of key employees from both companies; the loss of commercial and vendor partners; the disruption of the Company’s, MER’s or both companies’ ongoing businesses; inconsistencies in standards, controls, procedures and policies; unexpected integration issues; higher than expected integration costs and an overall post-completion integration process that takes longer than originally anticipated.

Current report

The combined company will be required to devote management attention and resources to integrating its business practices and operations, and prior to the contribution, management attention and resources will be required to plan for such integration. An inability to realize the full extent of the anticipated benefits of the contribution and the other transactions contemplated by the definitive agreement, as well as any delays encountered in the integration process, could have an adverse effect upon the revenues, level of expenses and operating results of the combined company, which may adversely affect the value of the common stock of the combined company.

Current report

In addition, the actual integration may result in additional and unforeseen expenses, and the anticipated benefits of the integration plan may not be realized. There are a large number of processes, policies, procedures, operations and technologies and systems that must be integrated in connection with the contribution and the integration of MER’s business. Although the Company expects that the elimination of duplicative costs, strategic benefits, and additional income, as well as the realization of other efficiencies related to the integration of the business, may offset incremental transaction and contribution-related costs over time, any net benefit may not be achieved in the near term or at all. If the Company and MER are not able to adequately address integration challenges, the Company may be unable to successfully integrate operations or realize the anticipated benefits of the integration of the two companies.

Current report

Finally, Solaris LLC intends to use a combination of debt financing and free cash flow generated from the legacy Solaris Inc. business to fund the cash due at closing, in addition to the acquisition of approximately $308 million of on-order turbines MER has previously committed to purchase. Although Solaris Inc.’s obligation to complete the contribution is not conditioned upon obtaining financing, Solaris Inc. has secured committed financing from a group led by Banco Santander in the form of a $300 million 364-day senior secured bridge term loan facility. The Company expects to obtain alternative financing for its cash needs relating to the contribution prior to closing, in which case it would not expect to draw upon the Santander Facility; however, the Company may be unable to obtain such alternative financing on attractive terms or at all. If the Company is unable to obtain such alternative financing prior to closing such that the Company draws from the Santander Facility at closing of the contribution, the Company expects to refinance the Santander Facility promptly thereafter.

Current report

The ownership percentage of current Solaris Inc. stockholders will be significantly diluted by the issuance of Class B common stock in connection with the MER Acquisition.

Current report

The issuance of Class B common stock in connection with the MER Acquisition will result in significant dilution of the ownership percentage of the Company of current Company stockholders following the contribution. Based on the estimated number of shares of the Company’s Class A and Class B common stock outstanding immediately prior to the execution of the definitive agreement, current Company stockholders are expected to own approximately 73% of the Company following the contribution, whereas the holders of the issued and outstanding equity interests of MER are expect to own approximately 27% of the Company following the contribution. Consequently, current Company stockholders will, as a general matter, have less influence over the management and policies of the Company following the contribution as compared to their influence over the Company prior to the contribution.